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UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 38102 / December 31, 1996
ADMINISTRATIVE PROCEEDING
File No. 3-9211
__________________________
:
In the Matter of : ORDER PURSUANT TO SECTIONS
: 15(b), 15B AND 19(h) OF THE
MARK S. FERBER, : SECURITIES EXCHANGE ACT OF
: 1934, INSTITUTING PROCEEDINGS,
Respondent. : MAKING FINDINGS AND IMPOSING
: REMEDIAL SANCTIONS
__________________________:
I.
The Securities and Exchange Commission ("Commission") deems
it appropriate and in the public interest that a public
administrative proceeding be instituted pursuant to Sections
15(b), 15B and 19(h) of the Securities Exchange Act of 1934
("Exchange Act") against Mark S. Ferber ("Ferber").
II.
In anticipation of the institution of these proceedings,
Ferber has submitted an Offer of Settlement ("Offer") that the
Commission has determined to accept. Solely for the purpose of
this proceeding, and any other proceeding brought by or on behalf
of the Commission, or to which the Commission is a party, and
prior to a hearing pursuant to the Commission's Rules of
Practice, 17 C.F.R. 201.100 et seq., and without admitting or
denying the findings contained herein, except as to the
jurisdiction of the Commission over him and over the subject
matter of this proceeding and the entry of the conviction and
injunction as set forth in paragraphs III.B.1. and III.C.5.,
which are admitted, Ferber consents to the issuance of this Order
Pursuant to Sections 15(b), 15B and 19(h) of the Exchange Act,
Instituting Proceedings, Making Findings and Imposing Remedial
Sanctions (the "Order") and to the imposition of the remedial
sanctions set forth below.
III.
FINDINGS
On the basis of this Order and the Offer, the Commission
finds that:
A. Respondent
Ferber, a resident of Concord, Massachusetts, was at
all times relevant hereto an investment banker with Lazard Freres
& Co., a broker-dealer and municipal securities dealer with a
principal place of business in New York, New York ("Lazard").
Ferber joined Lazard in April 1988 as Senior Vice President, and
was promoted to General Partner in January 1990. Ferber
established and managed Lazard's Municipal Department branch
office in Boston, Massachusetts until he resigned in January
1993.
B. Criminal Conviction
1. Following his conviction on mail and wire fraud
charges, on December 19, 1996, Ferber was sentenced to a prison
term of 33 months, and was ordered to pay a criminal fine of
$1,000,000. United States of America v. Mark S. Ferber, Criminal
No. 95-10338-WGY (D. Mass).
2. The indictment alleged that Ferber violated his
fiduciary duties to his public financial advisory clients. The
indictment further alleged that Ferber intentionally failed to
adequately disclose to those clients material facts concerning a
financial relationship that he entered into on behalf of Lazard
with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), and thereby deprived his financial advisory clients of
the ability to assess his advice concerning Merrill Lynch.
C. Injunction for Securities Laws Violations
1. On December 19, 1996 the Commission filed a
Complaint against Ferber in the United States District Court for
the District of Massachusetts, SEC v. Mark S. Ferber, Civil
Action No. 96-12653 (EFH) (D. Mass). -[1]-
2. The Complaint alleged that Ferber was responsible
for performing and/or overseeing all financial advisory services
provided to the Massachusetts Water Resources Authority ("MWRA"),
the District of Columbia ("the District") and the United States
Postal Service ("USPS"). The Complaint alleged that Ferber, on
---------FOOTNOTES----------
-[1]- See Litigation Release No. 15193 (December 19,
1996).
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behalf of Lazard, negotiated a lucrative contract with Merrill
Lynch, which provided that Lazard and Merrill Lynch would jointly
market interest rate swaps and that Lazard would be a consultant
to Merrill Lynch. The Complaint alleged that Ferber and others
under his direct supervision primarily provided Lazard's services
under the contract. Pursuant to the contract, between September
1990 and November 1992, Merrill Lynch paid Lazard nearly $5.8
million, which resulted in a substantial financial benefit to
Ferber.
3. The Complaint further alleged that the contract
with Merrill Lynch was a material fact that should have been
disclosed to Lazard's financial advisory clients that were
serviced by Ferber and were considering the selection of Merrill
Lynch as a provider of financial services. The Complaint alleged
that the contract created at least a potential conflict of
interest for Ferber in that it gave rise to a significant risk
that Ferber would not provide impartial advice to the financial
advisory clients that were considering the selection of Merrill
Lynch as a provider of financial services. Thus, the Complaint
alleged that the contract created the potential for Ferber to
abuse his influence over the financial advisory clients.
4. The Complaint further alleged that Ferber
knowingly or recklessly failed to adequately disclose the
contract to the MWRA, the District and the USPS, all of which
selected Merrill Lynch to provide underwriting, interest rate
swap or other financial services in connection with municipal
securities offerings and/or the purchase and sale of securities.
As a result, the Complaint alleged that Ferber defrauded these
financial advisory clients and the purchasers of their municipal
securities.
5. On December 19, 1996, without admitting or denying
the Commission's allegations, Ferber consented to the entry of a
final judgment of permanent injunction. On December 27, 1996,
the District Court (i) permanently enjoined Ferber from future
violations of Sections 10(b) and 15B(c)(1) of the Exchange Act,
Rule 10b-5 thereunder and rule G-17 of the Municipal Securities
Rulemaking Board, and (ii) ordered Ferber to pay disgorgement of
$553,000, plus prejudgment interest of $97,000, for a total of
$650,000.
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IV.
Based on the foregoing, the Commission deems it appropriate
and in the public interest to impose the sanctions specified in
Ferber's Offer of Settlement.
Accordingly, IT IS HEREBY ORDERED that Ferber be, and hereby
is, barred from association with any broker, dealer, municipal
securities dealer, investment adviser or investment company.
By the Commission.
Jonathan G. Katz
Secretary
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